Chapter 3 How to make a plan in three days?

For most large businesses, developing a budget takes weeks or even months, which is unnecessary and a huge waste of time.You've probably realized that you can (and need to) speed up the process.But do you believe you can prepare a budget plan in three days?As far as we know, some companies are like this. First of all, you have to convene relevant department leaders, sit together, have an active and open dialogue, and understand the situation of the entire company-including the relationship between various departments.We call this approach the principle of synchronicity. Almost all budgets or operating plans are carried out in a certain chronological order, from top to bottom or from bottom to top: goals and preconditions belong to the upper layer, while the actual situation of each department belongs to the more detailed lower layer question.The problem is, this approach to budgeting prevents the company from harnessing the power of simultaneous conversations that allow stakeholders to understand each other and, in turn, to coordinate across the company.

This dialogue is typically held in three-day workshops involving the leaders of each major department, their direct reports, department executives and functional staff.Before participating in the meeting, they all had a certain understanding of the external environment of the company, the situation of competitors, and the company's financial and other goals. Meetings often focus on just a few issues, but in most cases the resolution of those few issues will have an impact on 80% of the company's business.For example, product mix issues, marginal operating costs, marketing expenses, manufacturing costs, engineering and R&D expenses, and so on.Leaders began by asking each department to come up with its own action plan for the company's budget situation.He then asks questions about the future conditions of the department's plans and the impact the action plan will have on other departments.For example, if a manager is going to increase product sales by lowering prices, the production department sends a signal: How much will the increased cost be?Are workers required to work overtime?Other departments will ask the same question.

After everyone had offered their input, the group stopped for an hour and each manager discussed their situation with their team.For example, a manufacturing team might consider: How much can the cost per unit of product be reduced if production volumes are increased?How much room for price reduction?At the same time, they will also consider other options: Is it possible to implement a three-shift system?Or simply outsource some production tasks to other companies?Where can I source more parts? When the group meeting resumes, they will enter all the information into a unified computer spreadsheet program.In this way, they can quickly develop a holistic view of what's going on across the company.At any point in the budgeting process, they can make judgments about the feasibility of a proposal and its impact on the rest of the company.Then they will revise all proposals again.Typically, after four rounds, this discussion and revisions lead to a final outcome—they'll have a basic budget and operating plan, and the rest will be done when they're back in the office.

Of course, if you can't lead an active development conversation, or can't persuade people to choose between different solutions in a convincing way, or if you lack confidence in your own abilities, the above mentioned This method may not be suitable for you.But if you have these conditions, the budget formulated according to this process will make you confident and able to continuously adjust your plan as the external environment changes.Everyone understands their role in the overall organization.You will find that people are able to react to the environment in a faster way and come up with new ideas more actively, because they know that the current budget plan can be adjusted at any time.

At the same time, the process itself is a powerful team-building exercise.